Currently, there is no price benchmark for coal. The index would be calculated on the basis of a weighted price average of coal computed from the price of different grades of coal tendered at various coalmines across the country.
The index is being set up to track the price movement of coal in the country and mark a scientific trend to coal price movement. The index would benefit the industry at large, which would have an alternative price discovery mechanism, said Arvind Singh of NCDEX, who is involved with calculating the index.
The move comes in the backdrop of the government mulling the re-launch of coal e-auction to ensure a level playing field. The apex court had put a halt to e-auction in December 2006 after it was alleged that big players were taking unfair advantage.
NCDEX had tied up with Mjunction last year to launch a coal price index which was launched in September last year. But in December the index was discontinued because of the Supreme court ruling to stop selling coal through e-auction, said a senior Mjunction official. But, with talks of the government restarting e-auction, the coal price index would be revived, the official added.
The government plans to re-launch e-auction of coal as part of new coal distribution policy.